“This is more than justified based on the returns Irish processors are now getting for dairy products, and it’s vital to help dairy farmers meet the spiralling cost of inputs at farm level,” IFA Dairy Chairman Stephen Arthur said.
Arthur characterised European dairy commodity markets as very strong, with cheddar cheese is now trading at over €5,500 per tonne. In the last 12 months, butter has risen by 69%; Skimmed Milk Powder by 62%; and Whole Milk Powder by 64%, data shared by the IFA revealed.
However, the farming association estimates that the milk price paid to farmers has only increased by 36% in the same period.
“Globally, milk supply is back 1% year to date. With high input costs, it’s forecasted that there will be no growth in world supply in 2022. Security of supply will be an issue as the year progresses,” Arthur insisted.
“Board members of dairy processors must look at what they are paying farmers for April milk. If this is less than what the markets are returning, then serious questions must be asked on how this can be justified given the input challenges dairy farmers are facing,” he concluded.
The call comes shortly after Fonterra, the world’s largest dairy exporter, narrowed its farmgate milk price amid warnings that turbulence and global geopolitical is hitting worldwide demand for dairy.
Fonterra CEO Miles Hurrell said worldwide demand for dairy products has been hit by the COVID-19 lockdowns in China, the economic crisis in Sri Lanka and the Russia-Ukraine conflict.
“While the long-term outlook for dairy remains positive, and we expect global demand and supply to be more balanced over the rest of the year, we have seen these short-term impacts flow through into pricing on the Global Dairy Trade (GDT) platform. For example, average prices for whole milk powder (WMP), a key driver of the milk price, have decreased by 18% over the past four GDT events,” he noted.
